Many point-of-sale and other financial transactions take place using card transactions. In these transactions, to provide payment, a card user presents a credit card, a bank debit or automated teller machine (ATM) card, or possibly a stored value card. The cards presented are conventionally of one and only one of these types. The cards presented typically access only a single account.
For example, a user may present a credit card to pay from a credit account maintained by the issuer of the card. The credit card is typically embossed with a unique account number, the cardholder's name, and the expiration date of the card. Data is also encoded on a magnetic stripe on the card. The data identifies the cardholder's account and may be accessed by magnetic card readers connected to a credit card processing system.
An ATM card is used in similar manner. The ATM card is a plastic card that is typically embossed with an account number and the holder's name. The ATM card also includes data encoded on a magnetic stripe of the card. The data identifies the cardholder's account and may be accessed by a magnetic card reader to use the card.
A stored value card is typically used to pay for a specific product or service. The stored value card includes data regarding a limited use account that is limited to providing payment for a specific product or service or for products and services at a specific merchant. The data permits processing equipment at the point of sale to determine the value of funds in the account.
In a typical card payment transaction, for example a credit card transaction, a buyer presents a credit card to a merchant at the point of sale. The apparatus at the point of sale reads account information from the card and passes this information along with the transaction data to the merchant's card processing system for approval from the card processor or qualifier that maintains the buyer's account. This approval transmission typically passes through a chain of processors. The merchant's card processing system typically interacts with a merchant acquirer's system. The merchant may also use a third party pre-router to process card transactions. The merchant acquirer is a middleman that provides card services to businesses that accept card transactions. The merchant acquirer typically sends the data to a card association or network such as Visa, Mastercard, American Express and others. The card association then obtains approval from the processing or qualifying institution for the individual card. The approval (or denial) is transmitted back down through this chain of processors. This chain of processing systems is also used during settlement of the transaction to provide transfer of the funds from the issuing institution to the merchant's account.